Economic Factors Of International Trade

1880 Words Apr 29th, 2016 8 Pages
1. Introduction
There are 2 purposes in this report. The first one is to determine whether developing nations are suffered from competitive disadvantages in the global market, and to find out whether the less developed countries taking any benefits from the free trade policy.

There are plenty of reasons for firms to desire to go international and expand their business to foreign markets. They see the opportunities to increase the market shares and the market size as well as to increase the profits by gaining greater revenues while at the same time reducing the production costs by utilising all the cheap resources they can obtain than only stick in the domestic markets. However, there are also facts which make firms hard to go: political factors and economic factors. Economists believe that international trade is a tool that can ends poverty and at the same time still providing benefit of production cost reduction to the developed nations and come out a win-win situation that both the developed and less developed nations can be benefited from it. Nonetheless, there are lots of researches find out the reality goes different from the way the economists expected.

The theories, research findings and real life examples are derived from secondary resources through the literature reviews of textbooks and academic journals.

The body of this essay will start with analysing the factors affecting the effectiveness of developing countries when they conducting international trade.…
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